T.C. M em o . 2 0 1 7 -1 3 6

UNITED STATES TAX COURT

DAVID D. PRITCHARD, Pet i t i o ner v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t BARBARA H. PRITCHARD, Pet i t i o n er v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo s . 9 0 2 5 -1 5 L, 9 0 2 6 -1 5 L
. Fi l edJ u l y 1 0, 2 0 17

.

W arren N. Nem iro ff, fo r p et i t i o n ers . Dav i dJ . W arn er, fo r res p o n d en t
.

M EM ORANDUM FINDINGS OF FACT AND OPINION CHIECHI, J ud g e: Pet i t i o n ers fi ledth e res p ect iv e p et i t i o n s i n th es e co n s o l i

d at edcas es i n res po n s e t o res p ect i v e n o t i ces o f d et erm i n at i o n co n cern i n g co l l ec-- 2

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[* 2 ] t i on act i on (s ) u n d er s ect i o n 6 3 2 0 an d/ o r 6 3 30 1 (co l lect i v el y , n ot ices o f d et erm i n at i o n ) thatres p o n den ti s s u edt o p et i t i o n er Dav idD. Pri t ch ardan dp et i

t i on er Barb ara H. Pri tch ard

. Th e i s s u e rem ai n i ng fo r d eci s i o n i s wh et her p et i t io n ers are l i ab l e fo r t h ei r t ax ab l e y ear 2 00 8 fo r t h e ad d i t i o n al t ax i m p o sedb y s ect io n 7 2 (t )(1 ) wi t h res p ectt o a d i s t ri b u t i o n th atthey

recei v edfro m

an i n d iv i du al ret i rem en tp l an th atth ey
m ai n t ai n ed . W e h o l dth atthey are. FINDINGS OF FACT Al l o f t h e fact s i n thes e cas es , wh i ch th e p art i es s ub m i t tedu n d er Ru l e 1 2 2 , h av e b een s t i p u lat edb y

th e p art i es an dare s o fo u nd

. Pet i t i o ners res i d edi n Cal i fo rn i a at t h e t i m e t h ey fi ledth e res p ect i v e p et i

t i on s i n t hes e cas es . Pet i t i o ners m ai n t ai nedan i n d i v i du al ret i rem en tp l an atJ PM o rg an Ch as e Ban k (p et i t i on ers ’ ret i rem en tp l an ). In J an u ary 2 0 0 8 , wh en each p et i t i o ner was
u n d er 5 9 1⁄2 y ears o l d , th ey m ad e a wi t h drawal o f $ 6 9 ,6 4 4 fro m t hatp l an (ret i rem en td i s t ri b u t i o n ). Th atd i st ri b u t i on was n o tm ad e o n acco u n t o f a l ev y u n d er

1 Al l s ect i o n referen ces are t o th e In tern al Rev en u e Co d e i n effect atal l rel ev an t t i m es . Al l Ru l e referen ces are t o th e Tax Co u rtRu l es o f Pract i ce an d Pro cedure.- 3

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[* 3 ] s ect i o n 6 3 3 1 t h atth e In t ern al Rev en u e Serv i ce (IRS) h adi s s u ed t o J PM o rg an Ch as e Ban kwi t h res p ectt o p et i t i o n ers ’ ret irem en t p l an . In Feb ru ary

2 0 0 8 , p et i t i o n ers d ep o si t edth ei r ret i rem en td i s t ri b u t io n i n t o a b an k acco u n tth atth ey

m ai n t ai nedatW as h i n g t o n M u tu al

. On M arch 2 5 , 2 0 0 8 , p et it i o n ers m ad e a p aym en to f $ 6 ,8 3 3.5 5 t o the Cal i fo rn i a Fran ch i s e Tax Bo ard . Th atb o ard cred i t edth atp aym en t t o ward s p et i t i o n ers ’

o u t s t an d i n g Cal i fo rn i a i nco m e t ax l i ab i l i t y fo r t h ei r t ax ab l e y ear 2 0 0 4. On M arch 2 7 , 2 0 0 8 , p et it i o n ers m ad e a p aym en to f $ 9 ,7 9 5.9 8 t o the IRS. Th e IRS cred i tedth atp aym en tt o ward s p et i t i o n ers ’ o ut s t an d i n g Fed eral i n co m e t ax l i ab i l i t y

fo r t h ei r t ax ab l e y ear 2 0 0 4. Pet i t i o ners jo i nt l y

fi ledFo rm

1 0 4 0 , U.S. In d i v i du al In co m e Tax Retu rn , fo r t h ei r t ax ab l e y ear 2 0 0 8 (2 0 0 8 retu rn ). Inthatretu rn , p et i ti o n ers i n cl u dedi n g ro s s i n co m e th ei r ret i rem en td i s t ri b u t i o n o f $ 6 9 ,6 4 4. Pet i t i o n ers s h o wedi n th e 2 0 0 8 retu rn th e 1 0 -p ercen tad di t i o n al t ax o f $ 6 ,9 6 4 i m p o s ed b y s ect i o n 7 2 (t )(1 ) (1 0

- p ercen tad d i ti o n al t ax ) wi t h res p ectt o th atd i s tri b ut i o n . Ho wev er, p et it i on ers d i d

n o trem i tth at1 0 -p ercen tad d i t i o n al t ax wi t h t h e 2 0 0 8 retu rn wh en o r aft er t h ey fi led it

. Th e IRS i s s u edt o p et i ti o n ers s ep arat e fi nal n o t ices o f i n t en tt o l ev y an d

n o t i ces o f y o u r ri g h tt o a h eari n g wi t h res p ectt o p et i ti o n ers ’ t ax ab l e y ear 2 0 0 8

.- 4

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[* 4 ] Th e IRS t i m el y

recei vedFo rm

1 2 1 5 3 , Req u es tfo r a Co l l ect io n Du e Pro ces s
o r Equi v al en tHeari n g (Fo rm 1 2 1 5 3 ), fro m

p et i t i o n ers . Res p o n d en t ’ s s et t lem en to ffi cer wi t h t h e IRS’ Ap p eal s Offi ce (Ap p eal s Offi ce) wh o was as s i g n ed t o p et i t i o ners ’ Fo rm 1 2 1 53 h el da t el ep ho n e h eari n g wi t h th ei r au t h o ri zedrep res en tat i v e. On M arch 1 0 , 2 0 1 5 , th e Ap p eal s Offi ce i s s uedt o p et it i on ers s ep arat e
n o t i ces o f d et erm in at i o n wi t h res p ect t o p et i t io n ers ’ t ax ab l e y ear 2 00 8 . Each o f t h o s e n o t i ces s t at edi n p ert i n en tp art : Su m m ary o f Det erm i n at i o n W e h av e d et erm in edth atal l ap p ro pri at e req u i rem en t s o f l aw an d ad m i n i s trat iv e p ro cedu res fo r t h e co l l ect i o n act i o n h av e b een m et
. Lev y act i o n i s n o tap p ro p ri at e wh ena t ax p ay er h as en t ered i nt o an i n s t al l m en tag reem en t . As s u ch , the l ev y i s n o tap p ro p ri at e an di s n ot s u s t ai n ed

. Each o f t h e n o t i ces o f d et erm i n at i o n i n cl u d edan at t ach m en tth at s tat edi n p ert i

n en t p art : SUMMARY AND RECOMMENDATI ON Yo u req u es t eda Co l l ect i o n Du e Pro ces s (CDP) h eari n g wi t h Ap p eal s u n d er In t ern al Rev en u e Co d e (IRC) § 6 3 3 0 fo l l owi n g recei p t o f t h e Fi n al No t i ce, No t i ce o f In t en tt o Lev y an dNo t i ce o f Yo u r Ri g h tt o a Heari n g . Th e l ev y en fo rcem en tact i o n p ro po s edi s n o t t h e ap pro p ri at e act i on i n t h i s cas e, fo r reas o n s s t at edb el ow.- 5

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[* 5 ] BRI EF BACKGROUND Yo u fi leda req u es tfo r a Co l lect i o n Du e Pro ces s (CDP) h eari n g u nd er In t ern al Rev en u e Co d e (IRC) § 6 3 3 0 fo l l o wi n g recei p to f Let t er 1 0 5 8 (LT1 1 ), Fi n al No t i ce o f In t en tt o Lev y an dNo t ice o f Yo u r Ri g h t t o a Heari n g . Th e Au to m at edCo l l ect i o n Sy st em (ACS) i s s u edth e n ot i ce o n J u n e 3 0, 2 0 1 4 v i a Cert i fi edM ai l, Retu rnRecei p tReq u es t ed . Fo rm 1 2 1 5 3 req u es t in g a CDP h eari n g was recei v edo n Sep t em b er 7 , 2 01 4 , wh i ch was wi t h i n t h e 3 0 -d ay p eri odfo r a t i m el y req u es t fo r a CDP h eari n g . W e v eri fi edthatth e p ro p er co d es t o s us p en d t h e l ev y an d t h e co ll ect i o n s t atu t e were i np u tt o th e t ax p eri o dati s s u e as o f t h e d at e t h e In t ern al Rev en u e Serv i ce (IRS) recei v edth e req u es tfo r t h e CDP h eari n g . Th e CDP n ot i ce was fo r an u np ai d i n co m e t ax l i ab i l i t y fo r t ax p eri od en d i ng Decem

b er 3 1 , 2 0 0 8 . Th e l i ab i li t y was b as edo n a s el f-as

s es s ed retu rn du e t o i n s u ffi ci en tfed eral t ax wi t hh o l d i n g /p aym en t s . On Sep t em

b er 2 5 , 2 0 1 4 , we s en t y o u [a] co n t actl et t er s ch edu l in g y o u r CDP t el ep h o n e h eari n g/ co n feren ce fo r Oct o b er 2 4 , 2 0 1 4. In th at l et t er, we al s o o ffered y ou a face-t o-face h eari n g o r wri t t en co rres p o n d en ce h eari n g as an al t ern at i v e t o th e s ch edu l edt el ep h o n e h eari n g. On Oct o b er 6 , 2 0 14 , we recei v ed co rres p on d en ce fro m y o u r Po wer Of At t o rn ey (POA), W arren Nem iro ff, co n fi rm in g th e t el ep h o n e h eari n g fo r Oct o b er 2 4 , 2 0 1 4

. On Oct o b er 2 4 , 2 01 4 , we m ad e an o u t cal l t o y ou r POA fo r t h e s ch ed

u l ed CDP co n feren ce; th e co n feren ce was co n du ct ed wi t h y o u r POA an dth e ap p eal s em

p l o y ee. Du ri n g the co n feren ce y ou r POA s t at ed t h atan o ffer i n co m

p ro m i s e was s ub m i t t ed . W e ex pl ai n ed t h e p ro ces s o f fi l i ng an o ffer i n co m

p ro m i s e i n ap peal s . Pen al t y ab at em en twas al s o d is cu s sed wi t h y o u r POA. W e d i s cu s s ed Let t er 8 5 3 (Pen al t y W ai v er o r Ab at em en tDi s al l o wed/Ap p eal s Pro cedu re Ex p l ai n ed ) th at was i s s u edi n Au g u s t/ Sep t em ber 2 0 1 4 . Yo u r POA s t at ed Let t er 8 5 3- 6

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[* 6 ] was ap p eal edb u t wi t h o u tres p o n s e. W e i n fo rm edy o u r POA o f an o p en co nt ro l fo r t h e p en al t y ap p eal an dwe i n fo rm ed y o u r POA Let t er 2 6 4 5 (In t eri m ) was i s s u ed

. On Oct o b er 2 8 , 2 01 4 we recei v eda co p y o f t h e s ubm i t t edFo rm 6 5 6 -L. On No vem

b er 1 4, 2 0 1 4 , we recei v ed ad di t i o n al co rres p on d en ce fro m y o u r POA. Yo u r POA s t at edth e m ajo r p en al t i es h av e n otb een res o lv ed . At tach edwas Let ter 3 5 03 C fro m IRS reg ard i n g p en al t y ab at em en to f t h e fai l u re t o p ay p en al t y b as ed o n g oo d h i s t o ry . On Feb ru ary 5 , 2 0 1 5 , we m ad e a fo l l o w-up cal l t o y o u r POA.

LEGAL AND ADMI NI STRATI VE REVI EW I, Bes s y Lo p ez, v eri fi edth e requ i rem en t s o f an y ap p l i cab le l aw o r ad m i n i s trat iv e p ro cedu re were m et . IRS reco rd s co n fi rm edth e p ro p er i s su an ce o f t h e n o t i ce an dd em an d , No t i ce o f In t en t t o Lev y an d/ o r No t i ce o f Fed eral Tax Li en (NFTL) fi l i n g , an dn o t i ce o f a ri g h t t o a Co l l ect io n Du e Pro ces s (CDP) h eari n g . An as s es s m en twas p ro perl y m ad e fo r each t ax an dp eri o d l i st edo n t h e CDP n o t i ce. No t i ce an d d em an dfo r p aym en twas m ai l edt o y o ur l as t kn o w n ad dres s . Th ere was a b al an ce du e wh en th e No t i ce o f In ten tt o Lev y was i s su edo r wh enth e NFTL fi l i n g was req u es ted

. I h adn o p ri o r i n v o lv em en twi t h res p ectt o t h e s peci fi c t ax p eri o d ei t h er i n Ap p eal s o r Co m p l i an ce. I rev i ewedth e Co l l ect i o n fi le, IRS reco rd s an d i n fo rm at i o n y o u p ro v i d ed . M y

rev i ew co n fi rm edth at t h e IRS fo ll o wedal l l eg al an d- 7

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[* 7 ] p ro cedu ral req u i rem en ts , an dth e act i o n s t ak en o r p ro po s ed were ap p ro p ri at e u n der t h e ci rcu m s t an ces . Co l l ecti o n Al terna ti v es Reques ted Du ri n g th e fo l l o w -up cal l t o y o u r POA o n Feb ru ary 5 , 2 01 5 , we ex p l ai n ed t h at t h e o ffer i n co m p ro m i s e fi l edu n d er d o ub tas t o l i ab i l

i t y was reject ed u n d er s o l el y t o d el ay co l l ect i o n . W e ex p l ai n edth at an o ffer i n co m

p ro m is e wo u l d h av e t o b e re-fi l edu n d er d o ub tas t o co l l ect i b i li t y . Ho wev er, y o u r POA d i dn o tp u rs u e an o ffer u n d er d o ub tas t o co ll ect i b il i ty
. Du ri n g th e fo l l o w -up cal l , an i n s t al lm en t ag reem en twas ag reed up o n fo r $ 3 20 .0 0 a m o nt h due ev ery 2 8 t h o f t h e m on t h ; fi rs tp aym en tdu e M arch 2 8 , 2 0 1 5
. Yo u wi l l b e ch arg eda o n e-t i m e u s er fee fo r y ou r n ew i n s tal l m en t ag reem en t . Th e o n e-t im e u s er fee wi l l b e fo r $ 12 0 .0 0 o r $ 43 .0 0 i f y o uare a l ow i n co m e t ax p ay er. Yo u wi l l s o o n recei v e p aym en t v o u ch ers fro m

th e IRS t o i n cl u d e wi t h y o u r p aym en ts
. Ho wev er, u n t i l y ou recei ve t h e p aym en tv o uch ers , wri t e y o u r s oci al s ecu ri ty n u m b er an dth e t ax p eri odo n t h e face o f t h e ch eck . Sen dthe p ay m en t s t o : In t ern al Rev en u e Serv i ce Fres no , CA 9 3 8 88 -0 0 1 0 Cha l l eng es to the Li a bi l i ty Yo u d i s pu t edy o u r l i ab i l i t y . Du ri n g th e fo l l o w -up cal l o f Feb ru ary 5 , 2 0 1 5 we d i s cu s s ed p en al t y ab at em en t . W e i n fo rm edy o u r POA t hatth e fai l u re t o p ay p en al t i es fo r $ 3 19 .9 8 an d$ 2 ,9 05 .2 3 h av e b een ab at eddu e t o g o o dh i s to ry . Ho wev er, y o ur POA req u es t edt o h av e t he p en al t y fo r earl y d i s t ri b u t i on wi t h drawal (Fo rm

1 0 9 9 R) ab at ed . W e i n fo rm edy o ur POA t h at t h e acco u n td o es n ’ ts h o wan y o t h er p en al t i es were as s es s ed

. Itwas- 8

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[* 8 ] t h en cl ari fy

th atth e IRS ch arg es an ad d i t i o n al 1 0 % t ax fo r an earl y d i s t ri b u t i on wi t h drawal

. Itwas ex p l ai n edth at1 0 % o f $ 6 9 ,6 4 4.0 0 , th e earl y d i s t ri b u t i o n (Fo rm

1 0 9 9 R) i s $ 6 , 9 6 4 . Yo u r POA req ues t edt o h av e t he $ 6 ,9 6 4 .0 0 rem o v edb as edo n reas o nab l e cau s e. W e i n fo rm edy o u r POA t h atwe co u l dn ’ tco n s i d er t h i s ab at em en t req u es t u n d er reas o n ab le cau s e. W e i n fo rm edy o u r POA t h atth e ad d it i on al 1 0 % t ax was l i s t ed o n th e ret u rn at t h e t im e o f fi l i ng . Yo u r POA s t at edth aty o uwere n o t aware ab o utth e ad d it i on al 1 0 % t ax o n earl y d i s t ri b u t i on s . Un fo rtu n at el y , n o tkn o wi n g th e l aw i s n o treas o n ab l e cau s e fo r rem o v al o f a p en al t y . Yo u r POA s t at edth atreas on ab le cau s e i s du e t o the earl y

d i s t ri b u t i on wi t hd rawn t o p ay b ackt ax es th at were o w eddu e t o [a] “ u ns crupu l o us ” p rep arer. W e i n fo rm edy o u r POA th at t h i s i s al s o n o treas o n ab l e cau s e an d t h atwe wo u l dn o tb e ab at in g th e ad d i t i o nal 1 0% t ax o f $ 6 ,9 6 4

. 0 0 . W e i n fo rm edy o u r POA t h at[t he] t ax co u rtm ay

b e p et i t i o n edi f h e d idn o tag ree wi t h th e d eci si o n . Yo u ra i s ed no o ther i s s ues . OPINION Th e p art i es ag ree t h atp et i t i o n ers m ay d i s p u t e wh et h er t h ey are l i ab l e fo r t h ei r t ax ab l e y ear 2 0 0 8 fo r t h e 1 0 -p ercen tad d i t i o n al t ax u n d er s ect i on 7 2 (t )(1 ) wi t h res p ect t o th ei r ret irem en t d i st ri b u t i o n . Pet i t i o ners b ear t h e b urd en o f

es t ab l i s h in g th atth ey

are n o ts o l i ab l e. See Ru l e 1 4 2 (a); W el ch v . Hel veri n g , 2 9 0 U.S. 1 1 1 , 1 1 5 (1 9 3 3 ). Th atth e p art i es s ub m i t t edth es e cas es u n d er Ru l e 1 2 2 d o es
n o taffect wh o h as th e b u rd en o f p ro o f o r t he effect o f a fai l u re o f p ro o f. See Ru l e 1 2 2 (b ); Bo rch ers v . Co m

m i s s i on er, 9 5 T.C. 8 2 , 9 1 (1 9 9 0 ), aff’ d , 9 4 3 F.2 d2 2 (8 t h Ci r. 1 9 91 ).- 9

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[* 9 ] Sect io n 7 2 (t )(1 ) p ro v i d es : SEC. 7 2

. ANNUITIES; CERTAIN PROCEEDS OF ENDOW M ENT AND LIFE INSURANCE CONTRACTS.

(t ) 1 0 -Percen tAd di t i o n al Tax o n Earl y Di s tri b ut i o n s fro m Qu al i fi ed Ret i rem en tPl an s .--

(1 ) Im po s it i o n o f ad d i t i o n al t ax .--If an y t ax pay er recei v es an y

am o u n tfro m

a qu al i fi ed ret i rem en tp l an (as d efi n ed i n s ect i o n 4 9 7 4 (c)), t he t ax p ay er’ s t ax u n d er t hi s ch ap ter fo r t he t ax ab l e y ear i n wh i ch s uch am o u nti s recei v eds h al l b e i n creas ed b y

an am ou n tequ al t o 1 0 p ercen to f t h e p o rt io n o f s u ch am o u n twh i ch i s i n cl u d i b l e i n g ro s s i n co m e. A “ qual ifi edret i rem en tp l an ” i n cl u d es an i n d i v i du al ret i rem en tp l an . See s ec. 4 9 7 4 (c)(4 ). Sect io n 7 2 (t )(2 ) p ro v i d es cert ai n ex cep t i o n s t o th e 1 0 -p ercen tad d i t io n al t ax i m p o s edb y s ect i o n 7 2 (t )(1 ). Pet i t i o n ers co nced e t h atn o n e o f t h e ex cep t io n s i n
s ect i on 7 2 (t )(2 ) ap p l i es wi t h res p ectt o al l o r an y p o rt i o n o f t h ei r ret irem en t d i s t ri b u t i o n . 2 It i s n o n eth el es s p et i t i o n ers ’ p o s i t i o n thatth ey s h o ul dn o tb e l i ab l e fo r t h e 1 0 -p ercen t ad d i t io n al t ax i m po s ed b y s ect i o n 7 2(t )(1 ) o n t h atd i s t ri b u t i o n . As we u nd ers t an dthei r p o s i t i o n , p et i ti o n ers b el i ev e t h at t h e Co u rts h o u l d ad d t h e fo l lo wi n g two ex cep t i o n s t o th e ex cep t i o n s th atCo ng res s en u m erat edi n

2 In fact , p et it i o n ers s ti p u l at edfact s i n t he fi rs ts t i p u lat i on o f fact s t hat1 0 o f t h e ex cep t i o n s en u m erat ed i n s ec. 7 2 (t )(2 ) are n o tap p l i cab l e wi t h res p ectt o al l o r a p o rt i on o f t h ei r ret i rem en t d i s t ri b u t i o n .- 1 0 -

[* 1 0 ] s ect i o n 7 2 (t )(2 ): an ex cep t i o n wh ere t h ere i s reas o n ab l e cau s e fo r a t ax p ay er t o m ak e a wi t h drawal fro m an i n d i v i du al ret i rem en tp l an an d an ex cep t i o n wh ere t h e t ax p ay er u ses th e ret i rem en td i s t ri b u ti o n t o p ay o u t s t an di n g Fed eral an d/ o r St at e i nco m e t ax l i ab i l it ies . Acco rd i n g t o p et i t i o n ers :

W i t h i n th e co n fi n es o f [s ect io n ] 7 2 (t ) th es e Pet i t i o n ers are m ark ed l y cl o s e t o the s t atu t e ex cep t i o n s. Ev enth e Go v ern m en t co n s t ru es thati f t he p en s i o n acco u n th adb een l ev i ed , th e 1 0 % p en al t y wo u l d n o t ap p ly . * * * Th es e t ax p ay ers * * * u s eda 2 0 08 p en s i o n d i s t ri b u t io n t o p ay earl i er t ax es b ecau s e o f co n t i n u o u s IRS co l l ect i o n p res su re. Th i s m ay n o tb e t h e cl as s i c cas e wh ere t h e l ev y i s i n v ol v ed atth ati ns t an t , b u tcert ai n l y th e s p i ri to f wh atth e s t atu t e wan t s t o co v er. Th e s t atu t e d oes n o twan ta p en al t y i f ag g res s i v e IRS act i v i t y

i s cau s i n g th e d i s t ri bu t io n . * * * No w l oo kg en eral l y

atreas on ab le cau s e. Th e u n d ers i g n ed [p et i t i o n ers ] s p en t2 0 y ears fi g h t i n g s ect i o n 6 62 1 p en al t i es an d v al u at i o n p en al t i es as s o ci at edwi t h t h e i n fam o u s Fo od So u rce cas es . * * * Al l th o se t ax pay ers wan t edt o p ay the t ax es an dth e i n t eres t ; i t was th e p en al t i es thatm ad e t h e b i l l s o n ero us . * * * Th es e are l i t tl e p eo p l e wh o p ay

th ei r t ax es . Th ere i s n o fau l th ere. Th ere i s n o fai l ure t o rep orti n co m e. Th ere i s n o l at e ret u rn * * * Th e 1 0 % p en al t y s ho u l dn o t ap p l y h ere t o t h e ex ten tth e d i s t ri b u t i on p ay s t ax es .
* * * * * * * In s u m m ary , th ere i s [a] g oo dequ it ab l e arg u m en th ere t o “ ex p an d ” t h e ex cep t io ns fo r [s ect i o n ] 7 2 (t ) [s etfo rth i n s ect io n 7 2(t )(2 )]

.- 1 1 -

[* 1 1 ] W e n o te i n it i al l y

th ati n ad v an ci n g t h ei r p o s i t i o n u n der s ect i o n 7 2 (t )(2 ) p et i t i o n ers rel y

o n v ari o us fact u al co n t en t io n s reg ard i n g , i n t er al i a, wh y an dh o w t h ey u s edth ei r ret i rem en t d i s t ri b u t i o n , m o s t o f wh i ch are n ot s up p o rt edb y th e fu l l y s t i p u l at edreco rdi n th es e cas es . To th e ex t en tth ati n ad v an ci n g t hei r p o s i t i on p et i t i o n ers rel y

o n an y fact ual co n t en t i o ns th atare n o ts up p o rt edb y th e
reco rd , we h av e d is reg ard edth o s e co n t en t i o n s . Th e s h o rtan dl o n g an s wer t o p et i t i o n ers ’ p o s i t io n th atth ey s h o u ldn o tb e l i ab l e fo r t he 1 0 -p ercen t ad d it i o n al t ax i m p os edb y s ect i o n 7 2 (t )(1 ) wi t h res p ect t o t h ei r ret i rem en td is t ri b u t i on i s th atwe are b o u n db y th e ex cep t i o n s en u m erat edi n
s ect i on 7 2 (t )(2 ). See, e.g ., Ben z v . Co m m i s s i on er, 1 3 2 T.C. 3 3 0 , 3 3 2 (2 0 0 9 ). Pet i t io n ers co n ced e t h atn o ne o f t h e ex cep t i o n s i n s ect i o n 7 2 (t )(2 ) ap p l i es wi t h

res p ectt o al l o r an y

p o rt i on o f t h ei r ret i rem en t d i s t ri b u t i o n. 3 On th e reco rdb efo re u s , we fi n dth at p et i t io n ers are l i ab l e fo r t h ei r t ax ab l e y ear 2 0 0 8 fo r t h e 1 0 -p ercen tad d i ti o nal t ax i m p o sedb y s ect i o n 7 2 (t )(1 ) wi t h

res p ectt o t h ei r ret i rem en td i s t ri b u t i o n . W e h av e co n s id ered al l o f t h e co n t en ti o n s an darg u m en t s o f p et i t io n ers th at
are n o td i s cu ss edh erei n , an dwe fi n dth em t o b e wi t h o u tm eri t, i rrel ev an t , an d/ o r
m o ot
.

3 See s up ra n o t e 2

.- 1 2 -

[* 1 2 ] To refl ectthe fo reg o i n g , Deci s i o n s wi l l b e en t ered fo r
res p o nd en t
.